First, the disclaimer: I’m not a cryptocurrency or Ether smart contract expert, just blockchain-curious.
With a lot of buzz about cryptocurrencies and bitcoin forks lately (and forks that weren’t) my reading has triggered a fair amount of ICO advertising on my feeds.
One of those was for Lunar Fund, a crypto hedge fund using machine learning to trade, with the fund’s value spread across LNR Erc20 tokens. They tweet their trades on twitter and will return 60% of profits to the fund (90% for the first 6 months).
They’ve just opened up to a public sale of 10 million LNR tokens at a fixed price of 0.004 ether.
So, what doesn’t sound right:
- There’s no detail on the website of who’s behind the fund. Whilst anyone can put a photo on a web site it at least adds the possibility of googling those people to confirm their existence, history and participation. For Lunar it’s a complete unknown.
- There are no trade sizes posted on Twitter. Just profit percentages and prices but we can’t tell if this is 1 or 1,000 ether being traded.
- I’ve found no public Slack/Telegram group to be able to reach out to the fund managers.
- There were more than 20,000,000 LNR tokens created in the smart contract.
Combined with the lack of transparency this last point should be the most worrying for investors. Things it could be down to:
- Current investors: At best it’s for the fund’s current investors to give them the correct number of LNR for the current fund value but without any transparency we just don’t know.
- Fund Fee: these tokens are to pay the fund managers, in which case it could be that they’re diluting what’s contributed by half or more. I’m fine with an fund’s managers taking a fee (as normal funds do) but without transparency we don’t know what that fee is! The biggest fund management fee I pay in stocks is about 0.5%.
- A whale investor: Large ICO investors often get a good deal, cheaper coins or a pay back. Either or those dilutes the money that small investors put in.
I also can’t figure out how a fixed price can be set for an existing fund who’s value constantly changes, unless that price is excessive enough to cope with the margins during the sale. The unit prices of my stock funds change constantly so unless the ICO funding is separate and not part of an actively traded fund until the end of the ICO then a static price doesn’t feel right.
So far the maths doesn’t add up on this fund, mostly because a lot of the numbers aren’t known to the public.
If you want to investigate the distribution of tokens more, the three main addresses are below, with screengrabs taken just after the sale opened:
The donation address from which the 10 million public LNR is being distributed: https://etherscan.io/address/0x431F38FB679104B3DF018a65B1a22864f2534dFc
The contract creator address holds 5,999,050 tokens and has transferred out 5,000,000 to a third address in addition to the 10,000,000 to the public fund address: https://etherscan.io/address/0x29d3388d2c06bd5a1b17f0ed8987bcaea5714cf7#tokentxns
The 5 million holding address: https://etherscan.io/address/0x29d3388d2c06bd5a1b17f0ed8987bcaea5714cf7#tokentxns
This is what I’ve found so far but if you have any more information then please let me know and I’ll update this post if necessary.